Marfin Investment Group v. The Republic of Cyprus
ICSID · Investment (ICSID and treaty) · Cyprus · 26 Jul 2018
Why it matters
This award is significant for its detailed analysis of the Greece-Cyprus BIT's continued validity post-EU accession, and for its rejection of claims arising from Cyprus's bank resolution measures during the 2013 financial crisis. It clarifies that differential treatment of banks based on financial condition, not nationality, does not breach investment treaty protections.
Summary
The dispute arose from the collapse of Marfin Popular Bank (Laiki), Cyprus's second-largest bank, during the 2012-2013 financial crisis. Greek shareholders (Marfin Investment Group and individuals) claimed that Cyprus's actions, including the removal of management, refusal of a recapitalization plan, and ultimately the resolution of Laiki in March 2013, violated the Greece-Cyprus BIT. They alleged expropriation, unfair treatment, discrimination, and breach of full protection and security. The Tribunal first upheld jurisdiction, rejecting Cyprus's argument that the BIT was terminated by EU treaties. On the merits, the Tribunal found no expropriation: Cyprus's measures were a legitimate response to a systemic banking crisis, and Laiki's shareholders were treated no worse than those of the rescued Bank of Cyprus. The fair and equitable treatment claim failed because Cyprus acted reasonably and in good faith, providing liquidity and seeking EU funds. Discrimination claims were dismissed as any differential treatment was justified by the banks' different financial conditions. The Tribunal also rejected claims of breach of unilateral declarations and awarded costs of EUR 5 million against Claimants.
The detail
Parties: Marfin Investment Group v. The Republic of Cyprus
Case number: ICSID Case No. ARB/13/27
Outcome: The Tribunal dismissed all claims and ordered Claimants to pay Respondent EUR 5,000,000 in costs.
Applicable law: Agreement between the Government of the Hellenic Republic and the Government of the Republic of Cyprus (1992 BIT); ICSID Convention
Issues in play: The case involved the interplay between the Greece-Cyprus BIT and EU law, particularly regarding the termination or supersession of the BIT by later EU treaties. The Tribunal also considered the standard of fair and equitable treatment, expropriation, and discrimination under the BIT.
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